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Kaiser: Senate Republican Medicaid Cap Would Cost States $218 Billion

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States would have to spend $218 billion more between 2020 and 2029 to offset the federal funding cuts generated by the Senate Republican health bill’s “per capita cap” — the limit on annual federal Medicaid funding per beneficiary — new state-by-state estimates from the Kaiser Family Foundation find. (See table.) That’s on top of the estimated $302 billion increase in state spending needed to continue the Affordable Care Act’s Medicaid expansion in the 31 states and District of Columbia that adopted it. (As we’ve explained, the Senate bill phases out enhanced federal expansion funding to the states, effectively ending the expansion.)

The new Kaiser estimates are in line with the latest Congressional Budget Office (CBO) estimates of the Senate bill, which show that about one-quarter of its $756 billion in federal Medicaid spending cuts is due to the per capita cap.

To compensate for this large cost shift, states would have to either dramatically boost their own Medicaid spending — by significantly raising taxes and cutting other parts of their budget like education — or, as is far likelier, make deep cuts to Medicaid eligibility, benefits, and provider payments. Therefore, under the Senate bill, states would have to both drop their Medicaid expansions and increasingly roll back coverage for millions of seniors, people with disabilities, children, and parents and other adults outside of the expansion. The state cuts in response to the cap, in turn, would further reduce federal Medicaid spending, which is tied to the amount of state spending. (CBO’s estimates, unlike Kaiser’s, reflect those additional federal cuts.)

Finally, consistent with CBO estimates, the Kaiser analysis finds that the federal funding cuts from the per capita cap would grow over time as federal funding fails to keep pace with actual Medicaid per-beneficiary spending growth. By 2029, the funding cut would equal $64 billion — or 56 percent of the total federal Medicaid funding cut of $114 billion that states would face that year from the per capita cap and cut in Medicaid expansion funding.

*Assumes states increase their own spending to fully offset cost of federal funding cut. Actual federal Medicaid spending cut would be considerably larger if states cut their Medicaid programs in response to per capita cap funding cuts.